Stock Market Terms and Definitions

 

The stock market can be bewildering and unpredictable, sometimes even for a seasoned professional. But any journey toward understanding such a complex system has to begin with a few important stock terms and definitions.

Owning “stock” simply means that you own a part of a corporation, and that you are entitled to a specified share of the profits from that corporation. Stocks are divided into shares, and how many shares you own tells you the percentage of the corporation you own, based on the total number of shares that exist.

A “stock price” is what the market has determined to be the worth of a stock, based on current trends or even traditional stock prices history. For investors using modern search engines such as Yahoo historical stock prices listings can be easily found and, in some cases, used to predict future trends. Many stock terms, such as “bull”, “bear”, “upticks”, and “rallying”, refer to the upward or downward trend of stock prices.

The “Dow Jones Industrial Average” is one of those stock terms that everyone has heard, but not everyone understands. Simply put, it represents an average of 30 stock prices that are actively traded in the market. A Dow Jones stock quote is therefore based on the current average, which can be considered “up” or “down” relative to the previous most current average.

In the stock market closing prices are very important, since they represent the price at which the stock will remain until the market opens again the next day. If the general trend of overall closing prices has been higher than in previous days, the market is said to be a “bull” market. If prices have fallen, it is a “bear” market.

This is just an incredibly small sample of simplified stock terms and their definitions. Realize too that foreign markets, while interacting with our own market, nonetheless have their own unique stock terms as well.